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Wednesday, April 15, 2015

Talanx annual report 2014

Talanx arrived with their annual report some time ago and here is the summary concerning this report. I no longer know what happened with the share price upon the release of the report but during my five months of holding the share price has increased by around 16%. What was in the report?

To read the report in full please go here and due to the short holding period the only link I have to offer is the previous analysis of Talanx 2014.

Since I read the CEOs letter to the shareholder of MüRe I was interested to read also this one to find out how the two companies looked upon their situation due to the low interest climate. The CEO of Talanx mentioned it and said that they had been forced to expand their investments such as stepping into infrastructure to get an acceptable return but besides from that there were no crying or complaints like the CEO of MüRe did for several pages. I liked this!

In the income state we see that they managed to increase their written premiums with 3% which is pretty ok but they also had higher claims which is not good. They especially had problems with their industry insurance section (regarding fire) and at least they claim that it was a "freak" occurrence so hopefully their will not be this heavy burden next year. In the end the earnings increased with around 1% to 769 million euro which is 3.04 € per share and they, due to that, offered a dividend payment of 1.25 € per share, which should net me 100 € so that is fine.

Thinking back on MüRe again I took a look at their investment portfolio and what they got out from that... which was appalling with only 0.5% so also here I wanted to take a look at that and if we combine the table below with the net investment income above we receive that Talanx got around 3.7% out of their investments so well done Talanx!

Last but not least we should take a look at the combined ratio. Highly profitable markets, such as the Nordic market, they seem to be able to bring this value down to around 70-80% which is really good! For Talanx below we see that due to the industry issue mentioned previously they ended up with 101.7% in primary insurance which is dangerous if the insurance company has little to no investment to help generate additional money. What is the bad news below is that the combined ratio has increased each year. I hope that they managed to stop this trend but I doubt it will happen during 2015.

Conclusion: Talanx had a good year and it could have been even better without the freak accidents. They are cautious concerning 2015 but they have high expectations on their Poland, Turkey and Chile market expansion. I will remain as a shareholder.